Five ways to bring money and investment into your local area
Crowdfunding isn’t the only way to get projects off the ground. There are other ways to encourage investment.
With government grants disappearing and banks more reluctant to fund small businesses, local communities are seeking new ways to find investment.
Projects and businesses are being funded through local investment and crowdfunding, showing that money can be recycled within a local area.Here are five of the most interesting ways to boost local investment:
1. Create local investor networks. The first Local Investment Opportunity Network (Lion) was set up in Port Townsend in Washington. A Lion network is a group of local citizens who come together to help fund and support local businesses. They are now spreading across the US.
Slow Money chapters are also emerging across the world, aimed at finding alternatives to fast, big finance. In many places local investment clubs are springing up to keep money in the local area. One example is Small Potatoes in Maine, which makes small loans to strengthen the local food economy. In the UK, LendLocal connects investors to borrowers in their local communities, and in the US and Canada a number of economic development investment funds bring together capital from an area to invest to local people and businesses.
2. Ask the crowd. Crowdfunding – where local people and businesses are invited to fund a project – has been filling the gap as regeneration budgets are slashed. Locals are backing creative ideas that might previously have struggled to get off the ground; plans to turn a flyover into a public space in Liverpool raised over £40,000 on crowdfunding platform Spacehive and a water slide was erected on a main shopping street in Bristol on the May bank holiday weekend after more than £5,000 was raised.
More standard regeneration projects are also finding investment with the help of the crowd.
A collaboration between Manchester council, Red Rose Forest and others will turn Manchester’s Stevenson Square into a green urban oasis. And a community centre in Glyncoch in Wales that had struggled to secure funding will now be redeveloped after raising almost £800,000.
3. Launch a small business fund connected to a time bank. The Arroyo SECO community revolving loan fund is the first small business micro-loan programme funded and managed by a timebank. Recognising the fact that many small businesses were setting up as a result of the skill shares and exchanges within the timebank network, it decided to offer loans to members running or setting up small businesses and co-operatives.
Loans range from $500-$5,000 (£297-£2,969) and are aimed particularly at women and those in economic distress as well as ventures that fit with the timebank ethos. The loans are paid through the timebank’s credit union partner, with loans fees paid in time credits to the timebank.
4. Let the community take shares. Increasing local businesses are turning to their local communities for funding. The amount of equity raised through share offers in the UK trebled to £9m in 2012 and large-scale share offers in particular are on the rise.
The vast majority of share offers undertaken by community enterprises have been in the renewable energy, retail, pubs, brewing, food and farming sectors. Hudswell Community Pub in north Yorkshire is typical, raising over £250,000 in community shares to keep its local alive. FC United, a co-operatively owned football club in Manchester, has raised almost £1.7m through the issue of community shares and offers a real alternative to the way football is run and financed. In Sheffield, 500 community shareholders saved the building in which stainless steel cutlery was invented – Portland Works – from developers.
5. Keep the spend of institutions such as hospitals and universities local. Evergreen Co-operatives in Cleveland Ohio has harnessed the spending power of local hospitals and universities to rebuild its economy. Working with institutions to help them localise their spend, it has set up a number of co-ops to supply laundry services, energy and food from within the local neighbourhood.
In the UK the approach has inspired Preston Council’s Community Wealth Creation Initiative. Working with the Centre for Local Economic Strategies, the council is researching how much of the procurement spend of institutions – including Preston College, the University of Central Lancashire and Preston Council itself – actually stays in the local region. It aims to work with them to increase their local purchasing power, protecting and keeping jobs in the local community.
The original article can be read on the Guardian website here.